Why is a Digital Legacy Important to Your Estate Plan?
You probably think your current estate plan covers all your assets, from real estate or a business to investment accounts, and therefore protects your loved ones and the assets you’ve worked hard to accumulate — but what about your digital assets? In this article, we discuss the definition of digital assets, give examples of what they encompass, and explain why planning for a digital legacy may be an important update to your estate plan.
What are Digital Assets?
Digital assets are anything that exists in a digital format and comes with a right to use.
These can include, but are not limited to your:
- Digital copyrights or trademarks;
- Online videos, audios, photos, and documents (e.g. e-books, presentations, spreadsheets);
- Software (e.g. in the form of code) and websites (e.g. income-generating websites or blogs);
- Databases (e.g. cloud databases, customer databases);
- Digital arts and designs (e.g. drawings, paintings, music);
- Email accounts (e.g. Hotmail, Gmail) and social media accounts (e.g. Facebook, Twitter, Instagram);
- Digital currency; and
- Virtual real estate.
Why may Planning for a Digital Legacy be Important to You?
Planning for a digital legacy may be important to you because in the case of your death or incapacity, your loved ones or executor may not know that your digital assets exist or how to access them if needed. They may also be unable to legally obtain access to your digital assets. An example of such a scenario is a digital asset created under an agreement with Terms of Service that prohibit third-party access.
Digital assets with intrinsic financial value may be what first comes to mind, but digital assets with sentimental value (such as photos or music you’ve produced) and what happens to digital assets that reveal details of your private life (such as past email or text messages) may also be of concern. In extreme cases, expired or dormant accounts may become targets of cybercriminals who can take advantage of compromised passwords, obtain access, and create headaches for your loved ones. When you are no longer able to manage your accounts, no one receives notifications and no one can report your account being compromised or your identity being stolen.
How Can You Start Planning for Your Digital Legacy?
By updating your estate plan to include a digital estate plan, you have the opportunity to specify what actions are to be taken regarding your digital assets so that they are either shut down or kept accessible and protected, rather than locked in perpetuity. This is typically done in your will but can also be done separately to ensure privacy.
How do you start? The first step may be to list your digital assets and decide how you wish each one to be handled. You will also need to decide on your digital executor — one who you trust and who will ensure your wishes are carried out. Most importantly, you will have to confirm that your digital estate plan is legitimized taking into account the reality that your passwords may continue to change throughout your lifetime.
Planning a digital legacy is a complex matter. In this article we have made you aware of some first steps to ensure that you think about all digital aspects in terms of your estate plan. We advise you to consult a trusted professional who is well versed in estate planning to assess your particular situation. At Bloom Investment Counsel, Inc. we are happy to work with all your trusted partners to protect, preserve and build your wealth.
Bloom Investment Counsel, Inc. is a well-established Toronto-based independent, privately-owned boutique investment management firm providing customized, actively managed, Canadian and U.S. dividend-paying portfolios for wealthy individuals, family offices, foundations, corporations, institutions and trusts.
Founded in 1985, Bloom has experience in managing in excess of $2.5B in assets over the years. We believe that generating independent cash flow is central to the success of our clients’ portfolios because it provides capital for the present day, if needed, while continuing to preserve and build wealth for the future.
Follow Bloom Investment Counsel, Inc. on LinkedIn to stay up to date on our most recent articles.
Bloom Investment Counsel, Inc. | LinkedIn
Bloom Investment Counsel, Inc. | 290 followers on LinkedIn. Trusted by wealthy individuals, family offices…
This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.